Is $1 a Day a Reasonable Cost for New Environmental Policy?

The U.S. Environmental Protection Agency (EPA) recently reviewed the American Power Act, which was introduced on May 12, 2010, by U.S. Senators John Kerry (D-MA) and Joseph Lieberman (I-CT).  Last week, the EPA released the results of their analysis of the bill.  The EPA estimated that the overall cost to the average American household would be $80-$150 per year.  Senators Kerry and Lieberman were quick to gloat about what they claim are the EPA’s “favorable” findings on their legislation.  “Is the American household willing to pay less than $1 a day so we don’t have to buy oil from foreign countries, so we can create jobs and clean up our environment?  I think the answer is yes,” Senator Lieberman said. 

The EPA’s analysis of the American Power Act was based on the cap-and-trade section aimed at reducing greenhouse gas emissions (GHG) 17 percent below 2005 levels by 2020, as well as the provision designed to help manufacturers deal with the costs to comply with the legislation.  The EPA’s prediction is that industries would pay $12 to $41 in 2013 for an allowance that’s necessary for compliance with the bill’s GHG limits.  The cost would rise to $13 to $59 in 2020.  Of course, there is some skepticism surrounding the EPA figures; after all, you can’t exactly say that they are an impartial party.  The study didn’t consider provisions in the bill to improve energy efficiency from alternative fuels for vehicles or the requirement that civil aviation develop a global strategy for regulating GHG.

President Obama’s remarks last week during his prime-time speech from the Oval Office about the oil spill disaster in the Gulf of Mexico focused on the need for new energy sources and environmental policy.  While the American Power Act is the most recent legislation to advance the administration’s goals and had just been introduced, surprisingly the President didn’t mention the bill or two predecessors that were introduced in the U.S. House of Representatives and U.S. Senate last year.  Regardless of that legislation, Democratic Senators are currently divided on whether a cap-and-trade program for big industries should be included.  The midterm elections are fast approaching, and it is not likely that such legislation can make it through either the Senate or the House prior to those elections. 

So, is $1 a day a reasonable burden on American households?  I guess it depends on what you’ll be getting out of it.  Will our nation’s record deficit continue to grow as a result of this policy?  Will the bill ensure that other forms of energy will materially lessen our dependence on foreign oil? The EPA’s analysis didn’t include these important factors – maybe because they weren’t “favorable” findings.  In the short term, we may not see this legislation passed.  But, be it this or another similar bill, there are powerful political forces that want to see some form of environmental legislation passed.  Many things sound affordable when we break them down into a cost per day.  But, there is no guarantee that once in place those daily costs won’t rise or that all costs have been accurately calculated.  Absent concrete costs estimates and determinate benefits, I’d rather spend my $1 elsewhere.

To view NATA’s analysis of the American Power Act, please click here.

Written by:  Kristen Moore
Director of Legislative Affairs

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